2005 Sees Increases in IRS Audits

More than 10,000 more audits of small businesses organized as corporations were conducted during fiscal year 2005 than in the previous year according to enforcement data released by the Internal Revenue Service (IRS) on Wednesday. The number of large corporations and wealthy individuals audited also increased during the fiscal year ending September 30. These are just a few of the highlights were in remarks from IRS Commissioner Mark J. Everson marking the mid-point of his five-year term.

Enforcement highlights include:

  • Enforcement revenues increased by 10 percent to a record $47.3 billion. Enforcement monies are brought in by collection, examination and document matching activities.

  • The number of individual returns audited increased by 20 percent to 1.216 million.

  • More than 221,000 audits of individuals having incomes exceeding $100,000 were conducted. This number is highest figure in a decade and more than doubles the level of only four years ago.

  • 17,867 audits of small businesses organized as corporations were conducted representing an increase of more than 10,000 audits from the 7,294 conducted in 2004.

  • Audits of large corporations – those with more than $10 million in assets – increased 14 percent to 10,878. The coverage rate for large corporations has increased to 20 percent.

  • Recommendations to the Justice Department for prosecution declined 6 percent, representing a decline in narcotics and money laundering cases. Tax and tax-related cases were flat year over year.

  • Seizures have increased slightly but remain a little used tools.

In addition, Everson’s remarks noted that for the first time more than half of all individual tax returns were filed electronically, toll-free tax law accuracy hit a high of 89 percent, telephone service level was 83 percent and customer satisfaction with toll-free service was 95 percent, establishing a new record.

“We have augmented our enforcement efforts and brought in billions more to the Treasury, but not at the expense of service to taxpayers,” Everson said in his statement.

Charts depicting fiscal year 2005 enforcement and service can be found online at http://www.irs.gov/pub/irs-news/fy05_enforcement_and_service_chart.pdf.

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